BCOR 1015 Midterm Exam Questions and Answers Graded A+

Hayek's argument - ANSWER-He asserts that a centrally planned economy could never match the efficiency of the open market because what is known by a single agent is only a small fraction of the sum total of knowledge held by all members of society. A decentralized economy thus complements the dispersed nature of information spread throughout society. 3 main point of Hayek - ANSWER-Information is needed for rational economic order Information is decentralized dispersed knowledge Price mechanism works best Post Scarcity World, Aguilar - Millan - ANSWER-is an economic theory in which most goods can be produced in great abundance with minimal human labor needed, so that they become available to all very cheaply or even freely. One of the main traces of the scarcity periods is the increase and fluctuation of prices. To deal with that situation, technology advancements come into play, driving an efficient use of resources to a certain extent that costs will be considerably reduced (almost everything will be free). Artificial Scarcity, Cox - ANSWER-desire for things that are not necessary, people use these "things" to show off class and status, which promotes the production of goods that are not necessary shifting labor away from more useful goods and contributes to scarcity in capitalistic models (Robin Cox's idea) Our miserable 21st Century, Eberstadt - ANSWER-"Thus the bittersweet reality for real Americans in the early 21st century: Even though the American economy remains the world's unrivaled engine of wealth generation, those outside the bubble may have less of a shot at the American Dream than has been the case for decades, maybe generations - possibly ever since the Great Depression" ( drug abuse, incarceration, less stable families, health levels not increasing as predicted, wealth increasing but not equally) Free cash for everyone? - ANSWER-UBI is free money with no restrictions and no conditions Some believe that people would be worse off; less emotionally healthy and socially stable Others believe that people are resourceful, intelligent and hardworking night to benefit from UBI Finland had second thoughts about giving money to jobless people, Goodman - ANSWER-Wanted to try it out to see if people really would spend more time with their families or go back to school, but They are adopting new rules that require benefit recipients are looking for work or are in job training programs Market economy - ANSWER-choices decided by economic actors - people and organizations - within the market Using prices Privates users capitalsims - people's willingness to pay Profit incentive Competition / cooperation Markets maximize social welfare Centrally planned economy - ANSWER-choices decided by the state Operated by governments Planning both production and allocation Mixed economy - ANSWER-a combination on market and centrally planned economy Combination of markets and government regulation and guidance E.g. national defense Utilities Consumer protection ( monopolies) Federal Reserve ( interest rates) Incentives (taxes / subsidies) Property Rights guidelines - ANSWER-Needs to be well defined transferability - can you transfer this right to someone else? Enforceability Privare Goods - ANSWER-something that everyone can have, but you must 'pay from it" Rival and Excludable Common Resources - ANSWER-is a resource, such as water or pasture, that provides users with tangible benefitsRival and Non-excludable Natural Monopoly - ANSWER-when market can control the supply or price of something non- rivial excludable Public Good - ANSWER-everyone can use it and you can't control it (air, nation defense) excludable non -rival Why not socialism?, Cohen - ANSWER-camping trip and everyone acts like socialist but eventually turn into capitalist, The principle of socialist equality of opportunity eliminates all inequalities resulting from undeserved disadvantages or advantage,Cohen then argues that large-scale societies would be morally better if they were socialist. If we could figure out how to make societies run like the socialist camping trip, we would